Countries worldwide are putting in place sustainability and net zero commitments, which prompted corporations in Malaysia to step up and establish environment, social and governance (ESG) reporting to comply with international disclosure standards. The Malaysian government has also made a net zero commitment by 2050 and, to achieve that target, stakeholders from various sectors need to come together to make it a reality.

But one of the most common problems faced is that most companies have a sustainability goal to meet; however, they find it difficult to switch to 100% green energy. This is where renewable energy certificates come in. RECs are a tradable, market-based instrument that represent the delivery of 1 MWh of renewable energy to the grid and all associated environmental benefits of displacing 1 MWh of conventional power.

With the introduction of REC, the areas that did not have access to green energy now do. This green solution makes it easier and cost-effective for a company to achieve its sustainability goals.

Trading platforms for RECs have been in existence since 1995, when the first trading of RECs was conducted in California, USA. Corporations looking to offset their Scope 2 electricity emissions can purchase RECs that originate from beyond their home country. Since this practice was established, it has been widely used in the US, Europe and Asia.

Catering for industry demands and global sustainability trends, Tenaga Nasional Bhd (TNB), through its wholly-owned subsidiary, TNBX Sdn Bhd, is going to introduce the Malaysia Green Attributes Trading System. Once it goes live, mGATS is set to be the country’s first one-stop centre for business owners to secure the Malaysia RECs (mRECs) digitally.

Formerly functioning as an information page to obtain REC information in the country, it is to be rebranded into a digital marketplace for REC trading by 1Q2024.

The rebranded mGATS signifies a crucial milestone in Malaysia’s journey towards a greener and more sustainable energy future, says TNB president and CEO Datuk Seri Ir. Baharin Din. This initiative aligns with the National Energy Transition Roadmap (NETR) targeting a 70% share of renewable energy in Malaysia’s total primary energy supply by 2050.

The upgraded mGATS aims to benefit business customers substantially as a transparent and user-friendly means to acquiring green electricity, especially for those aiming for 100% renewable energy consumption.

“Once the mGATS platform is operational in the first quarter of 2024, commercial and industrial entities interested in acquiring mREC for indirect green electricity can participate in the bidding platform. mGATS would evolve over time to better serve our customers in their pursuit of green electricity.”

TNBX has been a pioneer in providing mRECs to customers in Malaysia since 2020, with Intel Technology Sdn Bhd being the first entity to purchase the certificates. Since then, many organisations have shown increasing interest in acquiring REC, especially RE100 affiliated companies, financial institutions and industrial companies that are finding it difficult to achieve 100% of their electricity from a renewable source.

RE100 is the global corporate renewable energy initiative bringing together hundreds of large and ambitious businesses committed to 100% renewable electricity.

TNBX managing director Ir Mohd Razif Abdul Halim says the increasing growth of renewable energy assets and plants in Malaysia has prompted growing interest in monetising their assets through REC as an energy commodity.

Mohd Razif says: “With the escalating requests for supply and demand to acquire REC, it is timely for TNBX to repurpose and rebrand our existing tracking platform for mREC to a trading platform with the support from industry stakeholders as well as the Natural Resources, Environment and Climate Change (NRECC) ministry.”

mGATS focuses on all types of renewable energy assets such as solar, mini-hydro dams, biomass and biogas. Mohd Razif says TNBX can on-board all these plants to obtain certification through the international REC registry, International REC (I-REC).

mGATS is designed as the platform on which asset owners can list their renewable energy plants and where green customers can bid for the mRECs derived from these sources to offset their energy consumption from the grid. This helps them address the greenhouse gas protocol (GHGP) Scope 2 emissions in relation to electricity generation.

“At present, mGATS will be adopting the I-REC Standard to acquire REC. I-REC is one of the two known international registries, apart from APX TIGR (Tradable Instrument for Global Renewables) for REC,” says Mohd Razif.

“As declared by I-REC, the standard itself ensures that all RECs for electricity are in adherence with major international sustainability standards including GHGP, CDP (Carbon Disclosure Project), RE100, ISO as well as national standards such as the Singaporean REC Standard.”

“Consequently, attribute tracking systems adherent to the I-REC Standard have a proven track record of robustness and trustworthiness, which have led to year-on-year increases in market volumes.”

Mohd Razif adds that TNBX has put in place a mechanism to address the potential perception of REC being a green-washing exercise.

“TNBX wishes to assure interested parties that the REC sources to be listed on mGATS are going to be grid-connected in Malaysia. This means being able to selectively identify a local renewable energy plant and acquire its energy with the assurance that its source of green energy is not from outside Malaysia,” he explains.

But there are other challenges to overcome, says Mohd Razif, such as ensuring that there is clear pricing of REC through a supply-and-demand bidding mechanism; providing clear information and guidance on how to obtain an REC; and ensuring transparency on the REC acquisition processes.

Naturally, mGATS fits right into the government’s aspiration to be a net zero nation by 2050, as acquiring REC would enable more organisations to achieve their net zero target more quickly. Mohd Razif explains that it also enables more green transactions to take place, and this could contribute to more development of renewable energy assets in the country, thus supporting the NETR target of 70% renewable capacity by 2050.

mGATS can also provide additional income to the asset owners, who commission their renewable energy assets. “We aspire for mGATS to continuously evolve to serve our customers better, enabling them to secure REC easily and fulfil their ESG goals. The first phase of mGATS is to provide an avenue for customers to bid for the RECs originating from various renewable energy sources,” he says.

“This could be bidding for the long-term contracts and/or the spot RECs itself. The option to bid for long-term contracts means customers can bid and lock in future green electricity generation for the coming years, which will help ease the need to source REC annually.”

As for the spot market, Mohd Razif elaborates that existing excess of green electricity may be open for customer bidding to acquire past green energy generated. This can range from within the past one to two years of REC vintage.

“In the second phase of mGATS, we plan to include an add-on feature for RECs to be aggregated. By positioning mGATS as a one-stop centre platform for green electricity, we are making it easier for green-conscious customers to trade and purchase the energy commodity of REC in an environment that is recognised by the global community,” he says.